Statement from United Way
Statement from the United Way of Tucson and Southern Arizona Board of Directors
Statement from the United Way of Tucson and Southern Arizona
Board of Directors
Given by Ronald K. Sable, Chairman of the Board
Thursday, April 22, 2010
The work that the Tucson United Way does, through partnerships with our community impact partners, is vitally important to those who need our help. We could not do the work we do in the community without the generosity of donors and grants. During tight economic times, community needs are greater and, in order to serve those needs, United Way must ensure that its donors continue to have faith and confidence in the organization.
Consequently, the Board requested the opportunity to talk to you today to better explain the cash flow situation we have been addressing since we were informed of it by senior management in October 2009. Upon learning of this cash flow challenge, we immediately took several steps to address the situation.
We froze expenses for compensation, training, travel and capital expenditures.
With approval authority led by the Chair of the Finance Committee, we changed the investment policy, requested management plans for recovery, and changed the grant funding policy to one that covers all expenses. In addition, a board committee was formed to review and approve all purchase orders. We also eliminated non-grant funded positions equating to some 25% of the overall full time staff.
We tasked our auditor of record, BeachFleischman PC, to work with us to develop a cash flow projection tool that would serve us well regardless of the revenue base. That work is nearing completion and once done, there will be a report made available to you.
We engaged DeVries CPAS of Arizona, PC, to conduct a financial analysis-narrowly focused-- to determine if the organization was abiding by United Way World Wide standards and if our procurement practices were being followed.
The DeVries and BeachFleischman engagements were not audits. Having said that, the work was performed by accounting firms. Since the work was intended specifically for the use of the United Way Board of Directors audit committee, we were advised not to release these reports to the public. We have reached an agreement with DeVries and today are releasing their report, after donor/vendor confidential information was redacted. We are also releasing a document from the auditors at Pima County who reviewed county employee contribution documents in February of this year.
We also began a review of the root causes of the cash flow situation. There were several; from the strains brought on by the declining economy and job loss, to the decline in investment return, to the challenges associated with substantial increases in grant revenue from State and Federal sources that the UWTSA was simply not prepared for. The organization expended its own unrestricted resources to start performance on major new programs, compounded by a slow payment process. The good news is that we were able to work with the government funders to help our cash flow issues.
During this time, we learned that partner agencies had not been told of the challenge we faced and that their payments were being delayed to help reduce the challenge. Quite simply, communications with the agencies was unacceptable. We can say categorically, that today our donor requested payments are current, our agency allocations are current and our obligations are paid up.
Our cash flow position has stabilized and we are able to meet our current obligations.
We are in the midst of budget discussions for the coming fiscal year, and we are planning as if the economic recovery will extend at least into the latter part of CY 2011. That suggests there will be some reduction in allocations going forward. Those reductions will not be made without further discussion with the agencies involved.
During all this, our longtime CFO departed. In August, our CEO elected to retire as of June 30, 2010. At his request, that retirement date was accelerated. In March, the Senior Vice President accepted a position in another city. His position will not be replaced.
Jim Holmberg, a member of the board, agreed to step in as the interim Board/Executive Liaison. He has taken leave from the board and serves in a voluntary, unpaid capacity, pending the selection of a new CEO.
We are in the process of searching for a new president and CEO. The President/ CEO search committee is comprised of board members and community leaders. With the help of an Executive recruiter from United Way Worldwide, we reviewed more than 150 resumes. Seven candidates were brought in for interviews on April 15th and 16th. The second rounds of interviews are tentatively scheduled for May 14th. We are hoping to name a new CEO in May.
When the CEO is on board, we expect to move quickly to hire a new CFO. In the interim, we are fortunate to have the services of a CPA assisting the finance department.
That was somewhat involved, but it is important that you know what happened and what was done about it.
The DeVries report contains some findings and recommendations. There is an outline of the Management Response/ Action Plan associated with those recommendations, and that is available to you as well.
We appreciate DeVries’ cooperation, which led to the release of the report. Know at the outset that there are redactions in the report required to comply with Privacy Act provisions.
Documents:
United Way Agreed Upon Procedures Report (DeVries CPAs of Arizona, PC)
Pima County Audit Letter
Open Letter to the Tucson Community (January 14, 2010)
